May 5, 2010 / 4:34 AM / in 8 years

U.S. diners plan to cut restaurant meals spending

LOS ANGELES (Reuters) - U.S. consumers are eating out more frequently, but plan to spend less on each meal, according to a study released on Tuesday by advisory firm AlixPartners.

<p>Waiter Doug Jenkins works in Pizzeria Uno in Chicago January 20, 2010. REUTERS/John Gress</p>

Consumers surveyed in late March said they planned to spend about $11.60 per restaurant meal over the coming 12 months -- down 21 percent from 2008 and 4 percent lower than last year.

Restaurants, which have seen traffic stabilize after the recession spawned steep declines, also are bracing for higher food costs later this year.

“Despite some stabilization of late, the restaurant industry is by no means out of the woods,” said Andy Eversbusch, a managing director at AlixPartners and head of the firm’s restaurant and food service practice.

“Sales will continue to be pressured by growing price sensitivity among virtually all consumers, regardless of the types of restaurants they visit,” Eversbusch said.

Lower food costs made it easier for all restaurants to offer discounts in 2009.

The Subway chain grabbed headlines with its $5, foot-long sandwich deal that established the second-most important restaurant price point since McDonald’s Corp introduced its Dollar Menu in 2002.

The expected decline in restaurant spending was due in part to the “Subway Effect,” said Eversbusch.

“This will be another year of deals. It has to be,” Adam Werner, a director at AlixPartners, told Reuters.

But not every operator feels that way.

Chili’s Grill & Bar parent Brinker International Inc said in April it planned to lessen its dependence on discounts.

Chili’s featured a “3 for $20” deal offering two entrees and both an appetizer and a dessert to split between two diners. The promotion initially cut into margins but eventually drew enough diners to have a positive effect.

Brinker’s sentiment is becoming more prevalent as food costs creep up and threaten to squeeze operators that depend on discounts.

AlixPartners director Adam Fless said companies can insulate themselves by doing things like adding high-margin products to menus, improving service and investing in growth markets like China, India and Brazil.

Reporting by Lisa Baertlein, editing by Leslie Gevirtz

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